Globus Maritime
Globus Maritime prepares for stormy weather
Dry bulk vessel group Globus Maritime (AIM: GLBS) painted a gloomy picture for the near term future of the marine transportation industry in its third quarter update today.
Third quarter financial results were in line with management expectations, with gross revenues up 130% to US$28.3 million, earnings before interest, tax, depreciation and amortisation (EBITDA) up 145% to US$21.8 million and net revenues up 125% to US$26.3 million.
The surge in revenues was due to an average time charter equivalent (TCE) rate of US$35,705 per vessel per day for its 8 vessels versus an average of 5.9 vessels and TCE rate of US$21.837 per vessel per day in the third quarter of 2007.
Utilization rates were also high, at 94.7% for 8 vessels versus 100% for 5.9 vessels in the corresponding period in 2007.
As at September 30 2008 Globus Maritime’s fleet comprised of six Handymaxes and two Panamaxes, with a weighted average age of approximately 11.5 years and a total carrying capacity of 415,558 DWT, the company stated. Since the end of the quarter, Globus has entered into an agreement to sell the Ocean Globe, reducing its fleet to seven vessels.
However, as expected, it was the outlook for the remainder of 2008 and beyond that investors sharpened their focus on, and the reading was not pretty.
Globus noted that the financial crisis combined with a decision by Brazilian miner Vale to “to demand of Chinese steel mills a mid-contract term increase in its iron ore prices of approximately 12%”, had hit the dry bulk shipping industry. Globus went on to add that importers were experiencing “unprecedented difficulty in securing letters of credit, which are the backbone of global trade”.
“Furthermore, the mistrust amongst banks in the interbank market has further drained the available liquidity. As a result, diverse cargoes of grain, coal, timber, consumer products, oil and others have all been affected by this credit crunch restricting the movement of cargoes from sellers to buyers”.
Perhaps most unnerving of all, Globus noted that as of 19 November 2008, the current charter coverage for 2009 is 18% of available days. Globus also reported that two of its vessels that are on charter would be returned at the end of November or early December, the “earliest possible dates under their respective time charters.”
George Karageorgiou, CEO of Globus, commented: "With our modern fleet, experienced management, moderate debt and high liquidity, Globus Maritime is well positioned to weather the current turmoil in the dry bulk industry and to take advantage of market opportunities as they may arise in turn creating long term value for our shareholders.
We believe that the current environment will create new market opportunities as vessel prices have been drastically reduced, fewer new ships will actually be delivered from the shipyards, and fewer buyers will have access to bank financing."
Globus said that as of today, it had total debt of US$159.4 million and cash balances of US$65.1 million.
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